Must government own gravel and sand in order to regulate their extraction?

Saturday June 27 2020

An excavator digs sand on the banks of Lake Victoria in

An excavator digs sand on the banks of Lake Victoria in Nakiwogo, Wakiso District on May 17. Government wants to amend the law such that clay, murram, sand or any stone commonly used for building or similar purposes are no longer privately owned by the landowner. PHOTO BY MICHAEL KAKUMIRIZI. 

By Denis Kusaasira

A fundamental concept under common law is that the owner of the land surface is the owner of the strata beneath it, including the minerals that are to be found there, unless there has been an alienation of them by a conveyance at common law, or by statute, to someone else.

Applied in the context of natural resources, this concept would suggest that in absence of some express or implied alienation, the “mineral bearing strata” of any land belongs to the owner of the land where it is found.

Uganda adheres to the regalian mineral tenure system, under which the mineral bearing strata is severed from landownership and vested in government for the benefit of the citizens.

Indeed, Article 244(1) of the Constitution, as amended by the Constitution Amendment Act 2005, provides: “(1) Subject to Article 26 of this Constitution, the entire property in, and the control of, all minerals and petroleum in, on or under, any land or waters in Uganda are vested in the government on behalf of the Republic of Uganda.”

However, clause (5) of Article 244 excludes clay, murram, sand or any stone commonly used for building or similar purposes, from the definition of minerals. Clause (6) of Article 244 provides that Parliament may regulate the exploitation of any substance excluded from the definition of minerals under Article 244, when exploited for commercial purposes.

Therefore, clay, murram, sand or any stone commonly used for building or similar purposes (which for the present purpose are referred to as “building substances”) are privately owned by the owner of the land based on the common law.

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The Mining and Mineral Policy for Uganda, 2018, states that there is need to regulate the commercial exploitation of building substances. The policy further states that the exclusion of building substances from the definition of minerals has led to limited revenue generation from such substances; yet these substances, if regulated, can contribute more than three per cent to GDP.

This policy shift is further reflected in the proposed Mining and Minerals Bill 2019, which seeks to vest building substances in government and place them under the same regulatory regime as minerals.

Clause 99 of the Bill provides: “(1) The entire property in and control of building substances exploited for commercial purposes, on or under any land or waters in Uganda are and shall be vested in the government, notwithstanding any right of ownership of or by any person in relation to any land in, on or under which any such building substances are found.

Should Parliament enact the above provisions of the Bill in their current form and substance, clay, murram, sand or any stone commonly used for building or similar purposes will cease to be the property of whoever owns the land in or under which they are found.

The key question, therefore, is: must government own building substances in order to regulate their extraction? The answer to this question is a no.

The fact that building substances are privately owned by whoever owns the land does not necessarily mean that they can be exploited by the landowner without any regulatory intervention by the State. Parliament may enact a law to regulate the exploitation of building substances, without necessarily vesting them in government.

Even under the current legal regime, government can regulate the commercial exploitation of building substances by imposing tax in form of income tax, and fees in form of permit fees, on whoever is engaged in the commercial exploitation of such substances.

Further, government can regulate the environmental aspect of exploitation of building substances, pursuant to Section 43 of the Land Act. This section provides: “A person who owns or occupies land shall manage and utilise the land in accordance with the Forests Act, the Mining Act, the National Environment Act, the Water Act, the Uganda Wildlife Act and any other law.”

In Amooti Nyakaana Vs National Environment Management Authority & Others [2015] UGSC 14, the Supreme Court of Uganda (sitting as a Constitutional Court of Appeal) observed that the purpose of Section 43 of the Land Act is, among others, to ensure that when people exercise their rights over their land, they do not prejudice the rights of others or the environment.

Therefore, it is not a must that government should own clay, murram, sand or any stone commonly used for building or similar purposes, in order to regulate their extraction.

Notably, Article 244(6) of the Constitution only permits Parliament to regulate the exploitation of building substances when they are exploited for commercial purposes. It does not permit Parliament to vest building substances in government.

The policy shift from the current regime where building substances are owned by landowners is inconsistent with the global standard. A comparative study of mineral tenure regimes in the world shows that in majority countries, building substances are privately owned by whoever owns the land where they are found.

Further, it poses a serious risk of triggering expropriation claims against government under Article 26 of the Constitution.

Lastly, and most importantly, the experience in the mineral sector shows that the commercial exploitation of minerals in Uganda has been prevented by, among others, conflicts between landowners and holders of mineral exploitation licences.

Landowners do not see real benefit to be derived from giving up their preferred land use in favour of mineral exploitation by third party holders of mineral exploitation licences. The same situation is likely to arise, if landowners do not own the building substances and do not see the benefit in giving up their preferred land-use in favour of commercial exploitation by third parties. The conflict between landowners and permit holders will prevent the extraction of such substances, hence causing a shortage in their supply.

This will in turn lead to escalation of the prices for building substances, due to their scarcity, and hence make construction of buildings and roads more costly or impossible.

Mr Kusaasira is a mineral law and policy expert.

editorial@ug.nationmedia.com

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